Frontier Communications purchases $500 million of two note series

By Toni Weeks

San Diego, June 19 - Frontier Communications Corp. said in a press release that it reached the $500 million maximum payment amount for its tender offer for two note series. The offer expired at 9 a.m. ET on June 15.

The company accepted for purchase $49.5 million of 7 7/8% senior notes due 2015 and $400 million of 8¼% senior notes due 2014, paying $54 million and $446 million, respectively, for the two series.

All of the 8¼% senior notes due 2014 that were purchased were tendered by the early offer deadline of 5 p.m. ET on May 31, with settlement occurring June 1. The total purchase price for those notes was equal to the maximum payment sublimit of $446 million. The company previously announced that investors had tendered $408,336,000 principal amount of the 8¼% notes, and the company purchased the notes using a proration factor of about 98%. No additional 8¼% notes were accepted after the early tender deadline.

The tender offer for the 7 7/8% notes due 2015 was also oversubscribed. A total of $147,612,000 principal amount of notes were validly tendered, and the amount accepted for purchase was prorated based on a proration factor of about 34%. As of the May 31 early deadline, holders had tendered about $146 million principal amount of the 7 7/8% notes.

Frontier used proceeds from the sale of its $500 million 9¼% senior notes due 2021 and cash on hand to fund the offers.

After settlement, $200 million of the 8¼% notes due 2014 and $450.5 million of 7 7/8% notes due 2015 remain outstanding.

The company began the tender offer May 17 for its $600 million of 8¼% notes and its $500 million of 7 7/8% senior notes due 2015, saying it would spend up to $500 million to purchase the two note series, with the 8¼% repurchase limited to $446 million.

As previously announced, the company paid $1,115.00 for each $1,000 principal amount of 8¼% notes and $1,091.25 for each $1,000 principal amount of 7 7/8% notes. The total purchase price included a $20.00 early tender premium for notes tendered by the early tender date.

Holders also received accrued interest up to but excluding the payment date.

Frontier did not solicit consents from holders of the notes in connection with the tender offer.

The tender offer was subject to the completion of Frontier's concurrent registered note offering of at least $500 million.

Deutsche Bank Securities Inc. (855 287-1922 or 212 250-7527) was the coordinating dealer manager. Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC were co-dealer managers. MacKenzie Partners, Inc. (800 322-2885 or 212 929-5500) was the depositary and information agent.

The Stamford, Conn.-based company offers voice, broadband, satellite video, wireless internet data access and data security solutions.

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